Transcript Final Application Training

Refunding Application
Best Practices
Section 523 Self-Help Housing Technical
Assistance
Prepared by NCALL Research
November 2007, updated 3/09
Throughout this slide presentation,
NCALL’s recommended “best
practices” will be notated with a
*BP.
2
A. Introduction
What Now?

No more predevelopment grant available


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Unless you’re going into a new area
Refunding application combines items in PreApplication and Final
Should take 3 to 4 months
A working relationship with Rural
Development is critical
NCALL is available throughout the
process
*BP Use NCALL as a resource ANYTIME
assistance is needed!
4
RD’s Expectations from grantees:
 Operate within RD’s regulations
 Carry out the responsibilities of the Grant
Agreement including:
 Recruiting low and very-low income applicants and
applicants from substandard housing
 Building the number of homes proposed
 Building the houses in a timely manner
 Keeping program costs within the required limit
 Ensuring that participants work on each others’
homes
 Setting up an acceptable accounting system
5
B. Feasibility
Feasibility
 *BP Even


experienced grantees cannot
bypass feasibility
The old way is not always the best way
Organizations must continually monitor:
Need
 Affordability
 Land availability and cost
 Availability of potential participants
 Staffing patterns

 *BP See
Guide for Feasibility Workbook
7
C. Refunding
Application Format
Required Format


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The format of the application is very
important
Rural Development requires that the
information be in a specific order
A three-ring binder with table of contents
and tabbed sections must be included
Tabs must correspond with item numbers
on RD checklist
9
*BP
An organization can drastically reduce its
chances of error by having someone that did
not put the application together recheck the
it for completion and accuracy before
copying and mailing it to Rural
Development.
10
Application Processing Through
Grant Closing Checklist (RD AN
4387)


RD’s checklist
Refer to the Refunding Application
Manual for actual checklist
11
NCALL’s Final Application
Review Checklist



Checklist NCALL uses to review
applications
It is has more detail and will help with
assembling the application and meeting all
of the requirements
See Guide for actual checklist
12
1. Standard Form 424,
version 2

Standard Form 424, v. 2, “Application for
Federal Assistance” and
Intergovernmental Review Response
1994.410 (e)
First thing that reviewers see, sample in
Manual
 Provides RD will all of the pertinent
information about the project – how many
homes, time period, area, funding
 Must be complete

13
*BP

There are many outdated or incorrect forms
out there. Use the correct form!
To ensure that you are using the most
recent, accurate form, you can:
1.
2.
Contact the State or Area RD office
Go to www.hudclips.org or NCALL’s website,
www.ncall.org
14
Intergovernmental Review



Intergovernmental review established to
foster partnership through coordination of
Federal funding
Include response from SPOC, may be on
A-95
Not every state has a SPOC, refer to Guide
for list
15
1b. Survey on Ensuring Equal
Opportunity for Applicants


This form helps to ensure that the
government is fairly distributing grant
funds
Complete this required form and include it
in your application
16
2. Waiting List of Participants
Waiting list should include:

Information on potential applicants are
interested in participating in the self-help
program
Names, addresses, number of persons in household
and total annual income is required
 Date of initial contact not required but helpful for
marketing & recruitment (See sample form in Guide)
 *BP Aim to have at least twice as many potential
participants as would be needed to complete the grant

17
3. Proof of Qualified
Participants


Proof is required that participants in the
first group have qualified for assistance or
been determined “eligible” by RD
Proof will be letters from RD
18
What Has to Happen for DE letters to be
issued:
Full application must be processed and
reviewed
 Household income is verified
 Credit history is checked
 All other eligibility requirements met
 Loan Originator determines payment subsidy
and maximum loan amount
 Letter of eligibility is issued
19


*BP
Include a cover page to this section
 Narrative should include number of
families in the first group, list of
family names, total cost estimates,
total 502 loan amount and other
loan/grant information that will be
used for the participant
20


If RD 502 loan does not cover complete
building costs, include narrative indicating
how gap will be covered
If additional loans, advise RD’s local office


Additional debt = increased debt to income
ratios
Proof will be needed that these funds
have been secured
21
4. Lot Options for First
Group

Land for the first group must be in control
Purchase agreements
 Copy of deed if owned
 Option agreements


Include a narrative identifying number in
first group, how land is controlled, by
whom, when it will be purchased and
where it is located
22

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Often grantees need interim financing to
obtain land
Control land by purchasing or entering
into an option agreement
See sample of Option to Purchase Real
Estate in Guide
Caution!! 523 Grant funds CANNOT be
used to option or purchase land.
23
5. Evidence of Lot Availability



Evidence of lot availability for remaining groups
is required
Lists of available lots, maps and prices are
required
Include a narrative summarizing what land is
available, whether site development is required,
timeframe for completion
24
6. House Plans, Specs, Detailed
Cost Estimates


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Certified house plans are required for
EVERY model that will be built during the
grant period
Specifications are required for every model
and for every family in the first group
Detailed cost estimates are required
25
House Plans

Certified house plans are required for
EVERY model that will be built during the
grant period

A complete set consists of plans and
blueprints which have been certified by an
architect or engineer licensed in your state
CERTIFIED!
26

Blueprints need to include the following
views with mechanicals noted:
 Foundation
plan
 Floor
plan
 Cross section
 Front and rear elevations
 Right and left side elevations


Average cost per set is $500-$700
Include a statement of the square footage of
livable space for each plan
27
 *BP Standardize

Limit selections to three basic plans
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plans
Plans can have varying living areas and varying number of
rooms
Cost estimate and use of materials will remain the same
Construction Supervisor and participants will become familiar
with plans
Try to standardize the cabinet and kitchen arrangement
House plans should be prepared in advance of the
formation of the first group of participants
Only one set needs to be certified original, the rest can
be copies
28
Choose plans based on what is in
demand by surveying the target area
and participants’ affordability!!
*BP
29
Developing Specifications


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After selecting house plans, develop a
specification sheet
Use Form RD 1924-2, “Description of
Materials”
One spec sheet should be used for each
participant in the first group
30


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The “Description of Materials” Form 1924-2 can
be located at www.rurdev.usda.gov/
regs/forms/1924-02.pdf.
Contact NCALL or the local RD office if you need
assistance
Material identification should be detailed
Attach additional sheets if necessary and
manufacturer’s specification sheets for equipment
and/or special materials
31
The design must meet RD’s requirements
which include:




RD’s Thermal Performance Standards
(1924-A, Exhibit D)
RD’s guidelines for affordability
No income producing facilities
No swimming pool
32
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Inspect every spec sheet for accuracy and
completeness
If questions arise, the specs and plans submitted
to RD will be used by the RD building inspector
Use the Guide for Inspection of Construction of
Dwellings and Buildings
Construction supervisor responsible for
completing the specs submitted in each loan
application
The State and the RD State Architect must
approve the plans and specifications
33
Cost Estimates

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One of an agency’s primary responsibilities
is to accurately estimate the cost of each
participant’s home before it is built
These cost estimates must be accurate,
they eventually become the participant’s
502 mortgage
Avoid making estimates that are
unrealistically low
Cost estimates can range from 2% to 3%
over, but never under
34
*BP If
there is a significant time between the
time of actual construction and the time of
cost estimates were obtained, update the
figures to reflect the current market prices.
35
Construction Materials
 To do a take-off, the Construction Supervisor
must:



Review the drawings of a single house plan
Record the materials that are called for in the
drawings
Once the take-off is completed, you should have
a full listing of all materials (quantity and
quality) required
36
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After obtaining the material bids, visit the
supplier
Meet the salesperson
Discuss delivery format, return policy, service
area and inquire about credit accounts for the
participants
Look for discounts for bulk purchases or get a
guarantee on prices in advance
37

After obtaining subcontractor bids:
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Interview the potential subcontractors
Ask for and check client references
View their past jobs
Determine their integrity and timeliness
Get a copy of their license and insurance coverage –
check the expiration date of both
Include the participants in this process, they will
be signing the contracts
Advise the participants, explain benefits and
drawbacks concerning the subcontractors
38
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Prepare a construction contract (samples in
the book) and attach the subcontractor
bids
Participants and subcontractors sign the
construction contract
Rural Development’s contract is preferred
*BP If construction contracts other than
RD’s are to be used, get RD approval
39
Land and other variable
costs
 In addition to direct costs, the indirect costs need to
be determined
 Indirect construction costs include:






Land
Fees (permits, surveys, closing costs, etc)
Appliances and equipment
Site improvements (grading, fences, driveways)
Landscaping
Contingency funds (3-5%)
40
Preparing House Designs
A General Flow of Events
I. Research Building Standards
Determine local building codes
 Determine acceptable RD design

II.Select
House Designs
 *BP Have
the house designs approved by RD
as early as possible to ensure they meet RD
standards
41
III.Get
Plans Certified
IV. Estimate Costs for Each House Design
a.
b.
c.
d.
Prepare material take-offs
Determine which construction jobs to subcontract
Issue request for bids, evaluate bids, select
suppliers and subcontractors
Issue request for bids, evaluate bids, select
suppliers and subcontractors
42
V. Involve

Each family selects their lot and house plan
VI.Prepare
Dockets

Individual Families
House Documents for 502
For each family 502 docket, prepare Detailed house plans and specs
 Plot plan
 Water/waste disposal system (if applicable)
 Cost estimate

43
VII. Send Docket to RD for Approval
VIII. Send House Documents to Local Officials
a. Building permit obtained
IX. Construction
44
Construction Contract

See Guide for sample of the RD
Construction Contract, Form RD 1924-6, or:

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Contact the State or Area RD office
www.rurdev.usda.gov
NCALL’s website, www.ncall.org
45
Guideline for Purchase of Bidding
Supplies/Soliciting Subcontractors

A guideline will need to be established
(Attachment O–OMB Circular A-110)

Organizations may use their own
procurement policies and procedures

They must meet the minimum standards on
page 98 in the Guide
46

See samples in Guide of:
Cost estimate summary
 Construction task matrix
 Self-help family time sheets

47
7. Staffing Needs and Hiring
Schedule
A self-help organization needs:
A
good program
 A sound budget
 A committed Board
 Qualified and motivated staff!
48
Staffing / Personnel

The regulations require:
 Proposed
hiring schedule
 Availability of prospective employees
 Board’s signed statement that
authorizes the Executive Director to hire
the necessary staff
49
Hiring Schedule

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A hiring schedule should be included in
the Refunding Application
Include all of the positions that will be
paid out of the self-help housing grant
funds
*BP See Guide for a sample
50
Indicate:
 Which positions are filled
 The anticipated hiring date of the
remaining positions
 Which positions will be full-time? Parttime?
 What percentage of their time will be
charged to the self-help program
51
Availability of Prospective
Employees


To prove the existence of potential
candidates, include a resume’ and letter of
commitment from the candidate
If waiting until grant approval, include a
description of how needed staff will be
located and a brief report on available
personnel in the area
52

Identifying the availability of personnel in
the area will require:
 the
number of applications received for the
job advertised
 a narrative describing the expected hiring
process
 Rural Development needs to be notified
for prior approval prior to hiring changes
occurring
53
8. Authorized Representative of
Applicant

Provide the name, address and official
position of the applicant’s representative
that is authorized to act for the applicant
and work with Rural Development
54
9. Budget Information – Non
Construction
Requirements:
 424-A
 Detailed Budget
 Detailed Budget Narrative
 RD Letter
 Method of TA Cost
55

424-A
Budget must be on form SF-424A, “Budget
Information (Non-Construction Programs)
 Complete it using the example in the Guide
 See NCALL’s website for the most recent
version

56

Detailed budget



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Detailed budget narrative



Include a detailed budget
See sample in Guide
Remember to include funds for NRSHHA dues
Include a detailed budget narrative
See sample in Guide
RD Letter



Include a letter from RD identifying the equivalent value
of comparable contractor-built 502 homes, less than 12
months
Include total square feet and total living area
Should include the actual or projected cost of an
acceptable site and site development
57

Method of TA Cost Calculation
Include the calculation of how the total grant
amount was calculated
 Indicate which allowable method was used
 See sample calculation in Guide

58
10. Indirect or Direct Cost
Requirements

Transmittal Letter

Response

Proposal
59

An approved direct or indirect cost policy
must be submitted
Document the indirect cost rate or the lack
thereof
 If a new policy is needed:

Prepare proposal for submission to DOI for
approval and include proposal in application
 DOI will not review proposal until grant is
approved

60
11. Monthly Activities Schedule


A finalized monthly activity schedule is
necessary
Monthly activities schedules allow for:
 Setting
specific goals
 Identifying time targets
 Identifying person’s responsible for tasks
 Letting everyone know what he/she is
suppose to do and whether they are on target
or not
 Identifying potential problems and
opportunities
 Improving decision-making process
 Focusing on grant activities to results
61
When planning, estimate a time range
instead of a specific date, this keeps your
schedule more realistic
The four most significant time elements
are:
 *BP

Duration of each step
 Earliest time each step may be started
 Latest time each step may be started
 Latest time each step may be completed

62

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It takes everyone’s commitment to
implement the SH project
The activity schedule should not be
created and forgotten
Use it to stay on track
Adjust if necessary
See Guide for samples
63
12. Personnel Practices and
Procedures

A copy of the most recent personnel policies is
required


Must be in compliance with federal, state and local
laws that effect employees
Personnel forms also need to be included in the
application and should include:





Time Sheets
Travel Advance Requests
Mileage Forms
Leave Requests
Employment application
64
13. Authorizing Resolution

A resolution must be adopted by the
Board of Directors:
Authorizing one or more specified persons are
authorized to act on organization’s behalf
 It must state that they are able to:

Sign the Grant Agreement, 1994-I, Exhibit A
 Sign Form RD 400-4 “Assurance Agreement”
 Work with RD on the self-help program


Must include authorized person’s name, title,
address
65
14. Assurance Agreement



RD Form 400-4
Include a signed copy of this form
Sample form in Guide
66
15. Fidelity Bond Coverage

Read Subpart C of 7 CFR 3015, deals with
“Bonding and Insurance”





Determine how it applies to you
Review it with a lawyer and accountant
Complete form RD 440-24 “Position Fidelity
Schedule Bond Declarations” to demonstrate
compliance
All staff who have authority to make purchases,
execute contracts or sign checks should be
covered
*BP Amount of the coverage should be at least
equal to the maximum amount of funds and
property the organization will have at anytime
67
16. Evidence of Interest
Bearing Checking Account and
Statement of Repayment of
Interest


Submit a copy of the account agreement of your
two-signature interest-bearing checking account
Include a signed statement saying that the
organization will return, on a quarterly basis,
any interest earned in excess of $250 per year

If the grantee is a public body, interest in excess of
$100 must be repaid.
68
17. Group Agreement
(including Exhibit B-2)




Include a copy of your group agreement
It must include Exhibit B-2, indicating the
breakdown of construction
*BP Each member of the group must read the
document or have the document read to
him/her, thoroughly understand it, and sign it
*BP The enforcement of the membership
agreement is key to the success of each group
69
18. Request for Obligation of Funds
Form RD



Include this completed form, RD 1940-1
At item 45, on the back, have the
authorized representative sign and date
two copies of the form
See Guide for sample
70
19. Self-Help TA Grant
Agreement

Include a signed, but not dated, copy of
the grant agreement
71
20. Certification Regarding
Drug Free Workplace


Include a signed and dated AD 1049
See Guide for form
72
21. Certification Regarding
Debarments


Include a signed and dated AD 1047
See Guide for form
73
22. Certification Regarding
Lobbying


Include a signed and dated RD 1940-Q,
Exhibit A-1
See Guide for form
74
23. Statement of Compliance




Include a statement that the organization
complies with the requirements of the
appropriate 7CFR
7 CFR establishes uniform requirements
for the administration of grants
The organization’s authorized
representative must sign and date it
See sample letter in Guide
75
24. Assurances – NonConstruction Programs



Complete SF 424B “Assurances -- NonConstruction Programs”
Certifies to Rural Development the
organization’s accounting system is
certifiable by a CPA as meeting the Grant
Agreement
Signed and dated by authorized
representative
76
25. RD Managers’ or Area
Managers’ Recommendation

Hold a section for this to be added later by
RD
77
26. T&MA Contractor’s Review
and Recommendation


Hold a section for this to be added later by
RD
Required under National Office Contract
78
27. National Office Review

Hold a section for this to be added later by
RD
79
28. Narrative Statement

The narrative statement should begin
with a short paragraph that summarizes:
 How
many homes are being planned
 What area they will be built
 How much grant funds are being requested
 What time period is planned (usually 24
months but can be less)
80

A description of the area to be served is
needed
 *BP Include
maps, population and housing
statistics
 *BP Collect current data, include only what
supports the need
 Sources: U.S. Census, State Housing Finance
Authority, local government housing plan,
area housing authorities, area Board of
Realtors
81

Include housing conditions and
why families need self-help
housing
 *BP Analyze
your data for comprehension.
What does it show? Growth? Substandard
housing? Income qualifications? Vacant
rentals? Cost of housing?
 A need occurs when very low and low income
families want their own homes but adequate,
affordable housing is not available to them!
82
 *BP Prove
affordability!
Estimate the cost of the self-help homes to
the participants
 Give estimate of monthly principle, interest,
taxes, insurance (PITI) payments and total
debt ratios
 Compare this figure to the cost of homes in
the area

83

Provide evidence of low-income
families willing to contribute labor

This information was included earlier in the
application, refer the reviewer to the correct
section
84

Evidence of community support is
required
 Include
letters of support from local
officials, individuals and community
organizations
Develop and distribute brochures or fact
sheets. Develop a relationship with the
media. Know the benefits and drawbacks of
the program. You will be asked!
 *BP
85
 Sources
of community support:
 Those in need of improved housing
 Town and county governments
 Churches/religious groups
 Civic organizations
 Social service agencies
 Other nonprofits
 General public
 Business/industry sectors
 Media
86
29. Current Financial
Statements





A financial statement is required and should be
prepared by an accountant (or by the sponsor’s
accountant), and must be no more that 12
months old
Must be dated and signed by the Executive
Director or Board President
Needs to show the specific nature of assets and
liabilities
An audit can be used for this, but one is not
required
If using a sponsor, the same type of financial
statement is required of them
87
30. Outreach Plan for Very Low
Income

A plan is required of how you propose to
reach the very low income families
It is important to reach families that are living
in housing that is deteriorated, dilapidate,
over crowded or lacking in adequate plumbing
 VLI- Minimum of 40% of total families
building in program must be VLI
 Develop a marketing strategy that will reach
and recruit the families needed for your
program

88
31. HUD Fair Housing Marketing Plan
935.2B (8/2006)

Affirmative Far Housing Marketing Plan
HUD Form 935.2b, required for self-help
program
 Follow instructions
 Use accurate information
 Marketing plan designed to attract those
“least likely to apply”
 Special outreach for those groups required
 Plan approved and monitored by Rural
Development
 See Form in Guide

89
32. Determination of TA Grant
Amount


This information is duplicated from the
earlier budget section
If the information was included there,
copy it here also
90
33. Intergovernmental Review
Submittal


This section needs to contain proof that
the application was submitted to the
appropriate state official for review
Not all states have this requirement
91
34. Civil Rights Impact Analysis
Certification, Form RD 2006-38



Form RD 2006-38
2006-P, 2006.754(b)
Rural Development will complete this form
Hold a spot for this in the application
92
35. OGC Review (if necessary)


If necessary, RD may send organizational
documents for OGC for their review
Hold a section for this to be added later by
RD
93
Putting the
Application Together
Use the Rural Development Checklist for order
and format
 Include a Table of Contents and tab the sections
 *BP Check every page for completeness,
signatures and dates
 *BP Send the application to NCALL first for a
draft review
 Make 2 copies of the application
 Submit applications in an original and one copy
to the designated Rural Development office

95
E. Monthly
Activities
 *BP
See Guide for a monthly breakdown of
activities to keep on schedule for
completing the application
97
F. Grant Closing
and Drawdowns

Request for Advance or Reimbursement, Form SF270






Form completed monthly and submitted to the RDM,
original and two copies
Used to notify RD of the grant funds used during the
previous month, the unspent funds on hand, and the
projected need for the next month
Written justification should be forwarded if amount
exceeds the projected need for the next 30 days
Must be in the RDM’s office 15 days prior to the
beginning of the month
If in order, RD will try to have advance check delivered
on the first of the next month
This is normally the only report of grant expenditures
that RD will require during the grant period
99

Rural Development can establish an
electronic transfer for the funds


They will need the routing and account
numbers
The first grant draw can be for the month
in which the grant was closed, the
following month and can include funds for
tool and equipment purchases
100
The End
101